A groundbreaking report from Demos has for the first time mapped the UK’s credit environment, and has found 29 ‘credit deserts’, where people struggle to access affordable credit despite a clear need for it.

The Good Credit Index, made possible by NewDay, a leading UK consumer finance provider, combines 21 datasets, including credit scores, local high street provisions, data from county courts and web searches to give the clearest idea yet of how the area you live in affects your ability to get affordable credit.

While there are many ‘credit havens’, where there is a low credit need and a plethora of affordable credit options, there are also ‘credit deserts’, marked by limited access to sustainable credit options, where people have little choice but to turn to high cost, short term credit providers, like payday lenders and pawn shops.

Author of the report, Demos senior researcher Sacha Hilhorst, said: “For those with good credit scores and low need, it’s easy not to think about credit too much. But for millions of people, credit is a regular source of worry. With little savings and very limited access to affordable credit, something as ordinary as a fridge breaking down can send you into a financial tailspin.

“The Good Credit Index shows this is not just a matter of personal finances, but also geography. In places where insecure contracts are the norm and payday lenders are abundant, people face very different choices from people in credit havens. To break these cycles of credit is disadvantage, we need systemic change as well as place-based strategies.”

The Index also found:

● There are fewer high street lenders operating than ever before. Of the seven large high street payday lenders active in 2014, only two still sell payday loans. However, this doesn’t mean people are accessing more affordable credit, as lenders increasingly operate online.

● There is a clear consensus as to what constitutes ‘good’ credit. It should be affordable, sustainable – offered only to those who can pay it back – and fully transparent, both in advertising and its use.

● Low income areas are more likely to be ‘credit deserts’, but it’s far from the only factor. Some low income areas will be bolstered by high levels of home ownership, while some middle-income areas have extremely low credit scores. This can be for a range of reasons – from thin credit files (common in student areas) to high levels of employment instability.

The Index shows that there is no one-size-fits-all solution to improving the credit environment across the country, and recommends a place-based approach to improve people’s access to credit where they live. It calls on local government and businesses to play their part in improving each area’s credit experience.

Read the full report here.

See the full index here.

Alongside the Good Credit Index, Demos is launching an on the ground financial inclusion initiative in the Sheffield City Region. For interactive Good Credit Index content, and information about the Good Credit Project, see www.goodcreditindex.co.uk.